By Emil Danielyan
President Robert Kocharian told Armenia’s tax authorities on Friday to do more to tackle corporate tax evasion which he said remains commonplace due to government corruption and favoritism.
Meeting with senior officials from the State Taxation Service (STS), Kocharian said their declared fight against the informal sector of the economy still leaves much to be desired despite a 24 percent rise in the government’s tax revenues registered during the first half of this year.
“I don’t think that your determination to act in this direction can be considered satisfactory today,” he said in comments released by the presidential press service. “The results are not bad, but they are far from being satisfactory.”
Armenia’s public spending is projected to grow by 25 percent to 394.6 billion drams ($885 million) this year. The STS and the State Customs Committee are on track to ensure a corresponding increase in the budgetary revenues.
But according to Kocharian, that does not mean that there have been fundamental improvements in tax administration. He said that it is still not “civilized” and that research conducted by the presidential Oversight Service found that a large part of economic activity in Armenia remains untaxed.
The Armenian leader singled out the construction sector which, according to official statistics, has expanded by over 40 percent in the first half of 2005. He complained that taxes paid by the construction firms rose only by 13 percent.
“Our main enemies are favoritism and clan-style practices,” Kocharian said, echoing his comments made at a similar meeting with the STS management last January. The high-profile meeting marked the beginning of the ongoing crackdown on tax fraud.
Some businessmen say the crackdown has mainly targeted small and medium-sized companies that are not owned by government-connected individuals.
The STS chief, Felix Tsolakian, admitted on Friday that corruption and conflicts of interest among his employees are a major problem. Tsolakian said about 200 of them have been found to be “directly or indirectly involved in business.” He said the STS will investigate business ties of officials at other government agencies.
But it was not clear if tax officials owning businesses have been fired or sanctioned otherwise.
(Presidential press service photo)